National Water Services Benchmarking Initiative

Transcription

1 National Water Services Benchmarking Initiative Promoting best practice Benchmarking outcomes for 2004/5 December 2005

2 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 i Challenges facing municipalities Preface The South African water sector faces four key challenges in the short and medium term: 1. to increase affordable access to water supply and sanitation services; 2. to ensure that the services provided are sustainable; 3. to develop the necessary capacity to meet the above two challenges; and 4. to improve performance so as to meet the above challenges in the most effective and efficient way. The role of benchmarking Benchmarking can play an important role in helping the sector to assess to what extent water services providers are meeting these challenges and, in particular, to what extent sector performance is improving over time. More significantly, benchmarking can help to identify best practices from which others can learn as well as areas most needing improvement. A national initiative The National Benchmarking Initiative is a joint initiative of the South African Local Government Association (SALGA), the Department of Water Affairs and Forestry (DWAF) and the Water Research Council (WRC). The goal is to promote improved performance of water services by all water services providers in South Africa. The initiative undertakes annual benchmarking of key performance indicators for the provision of water services in participating municipalities. This involves site visits and quality control to ensure consistency and reliability. Outcomes are presented at an annual benchmarking conference to highlight achievements and best practices and to direct learning efforts to areas where improvements can be achieved. DWAF has provided initial seed funding for the initiative. Ethekwini Municipality is the implementing agent. Palmer Development Group in association with Africon and EarthTech (Canada) are the service providers. Ensuring success The initiative aims to develop a sustainable benchmarking process which benefits participants and caters to their needs. The following principles inform the implementation of the initiative so as to ensure success: 1. Ownership of the process by senior water managers. The senior water managers must believe in the usefulness of the benchmarking programme, fully support the process and be directly involved. 2. Peer review. Peer review of benchmarking outcomes is a powerful mechanism not only to communicate the outcomes but also to ensure active participation in the process. 3. Moving from knowledge to changes in practice. If benchmarking does not lead to improvements in performance, then the benefits of the system are questionable. Linking this programme to changes in practice implies significant involvement of senior water managers in the benchmarking process. In addition, learning and change is more likely where water managers interact on a regular basis and share common concerns. 4. Incremental and selective rather than comprehensive. Ambitious benchmarking schemes have floundered due to a poor benefit-to-effort relationship. For this reason, the programme will focus on a few well-selected indicators. 5. Clear definitions. Adequate attention will be given to ensure clear, precise and consistently interpreted definitions. 6. Assessment of reliability. The source of data and its reliability must be well understood when measuring performance. 7. Quality assurance and audits. The process of collecting, entering and checking data needs to be based on sound quality assurance practices.

3 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 ii 8. Software. The software used needs to be both flexible and user friendly. 9. Sustainability. Payment for the benchmarking service by the beneficiaries of the service is a clear indication of the value derived and of commitment to the process. The sustainability of the benchmarking system will only be guaranteed if the initiative is funded by the water services authorities themselves in due course. 10. Professional expertise and experience. A sound benchmarking system is dependent on sound professional expertise on the part of the service provider undertaking the data collection and data analysis. 11. Responsive to user needs. The process needs to respond to and meet the needs of the water services managers. Acronyms DPLG DWAF DWQF KPI MFMA MIG PFMA SAAWU SABS SALGA SANS WSDP Department of Provincial and Local Government Department of Water Affairs and Forestry Drinking Water Quality Framework Key Performance Indicator Municipal Finance Management Act Municipal Infrastructure Grant Public Finance Management Act South African Association of Water Utilities South African Bureau of Standards South African Local Government Association South African National Standards Water Services Development Plan

4 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 iii Contents Preface i 1 Introduction Benchmarking in context The choice of indicators An annual report on sector performance Creating positive incentives to report and to perform 3 2 The benchmarking process The annual benchmarking cycle Constraints experienced for the 2004/5 round Participating municipalities Level of confidence in the performance indicators 6 3 Performance outcomes regulatory KPIs Introduction Institutional context Access to basic water services Drinking water quality Impact on the environment Strategic asset management and water-use efficiency Customer service standards Financial performance Institutional performance 36 4 Performance outcomes urban-related indicators Introduction Process and choice of indicators Institutional context large urban networks Performance outcomes with historic trends 41 5 Inputs by conference delegates Questions asked Access Drinking water quality Effluent discharge Asset management Customer service standards Financial and institutional 57 6 Learning from the Canadian experience 57 7 Conclusions and way forward 58

5 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 iv 7.1 A significant achievement but room for improvement Time-frames for Development of additional indicator sets Refining existing indicator sets Length of engagement with municipalities Additional support to participating municipalities Learning from best practices Development of peer networks More time to engage at the annual conference Positive incentives to perform Streamlining municipal reporting requirements Attendance at next conference 62 Annexure: Benchmarking data List of figures Figure 1: Level of confidence of data supplied... 6 Figure 2: Reported populations... 8 Figure 3: Scale of operations... 8 Figure 4: Percentage urban populations... 9 Figure 5: Percentage population with access to at least a basic water supply service...11 Figure 6: Water backlog (number of people)...12 Figure 7: Relationship between backlog and income (for water)...13 Figure 8: Rate of reduction in backlog to a basic supply...14 Figure 9: Percentage population access to at least a basic sanitation facility...15 Figure 10: Sanitation backlog (number of people)...16 Figure 11: Relationship between backlog and income (for sanitation)...17 Figure 12: Rate of reduction in sanitation backlog...17 Figure 13: Sanitation backlog compared to water backlog...18 Figure 14: Drinking water quality monitoring programme in place...20 Figure 15: Percentage samples failing the relevant standard...21 Figure 16: Status of wastewater treatment works...23 Figure 17: Status of effluent quality monitoring programme...24 Figure 18: Effluent quality - percentage samples passing the required standard...24 Figure 19: Meter coverage...26 Figure 20: Metering efficiency...27 Figure 21: Asset management plan approved by Council...28 Figure 22: Up-to-date asset register in place...29 Figure 23: Debtor days for water (or for water and sanitation where only this available)...32 Figure 24: Extent of dependency on grants...33 Figure 25: Retail water tariffs for normal domestic consumers...34 Figure 26: Water cost and pricing chain...35 Figure 27: Staffing levels per water connections...36 Figure 28: Submission of annual report to the Minister...37 Figure 29: Number of water connections...38 Figure 30: Total water services staff...39 Figure 31: Total income...39 Figure 32: Network length...40 Figure 33: Volume of wastewater treated...40 Figure 34: Water revenue per connection...41

6 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 v Figure 35: Sanitation revenue per connection...41 Figure 36: Water revenue per unit water sold...42 Figure 37: Unit costs of water...42 Figure 38: Unit costs per kl wastewater treated...43 Figure 39: Debtor days for water after provisions...43 Figure 40: Cash collection efficiency...44 Figure 41: Level of capital spending...44 Figure 42: Water supplied and sold per capita...45 Figure 43: Meter coverage...45 Figure 44: Unaccounted-for water...46 Figure 45: Frequency of pipe bursts...46 Figure 46: Service interruptions...47 Figure 47: Sewer blockages and spills...47 Figure 48: Pump station spills...48 Figure 49: Planned sewer maintenance...48 Figure 50: Extent of effluent re-use...49 Figure 51: Reported compliance with standards for sludge disposal...49 Figure 52: Staff per water connections...50 Figure 53: Management of overtime...50 Figure 54: Training days per employee...51 Figure 55: Training expenditure as a percentage of salary expenses...51 Figure 56: Capital spending versus budget...52 Figure 57: Average billing frequency in days...52 Figure 58: Proportion of bills set as estimates...53 Figure 59: Telephonic queries and complaints...53 Figure 60: Effort to benefit ratios - the Canadian experience...58 Figure 61: Application of benchmark sets...60 Figure 62: Status of benchmark sets...61 List of tables Table 1: Timetable for the annual benchmarking process... 4

7 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 1 1 Introduction 1.1 Benchmarking in context The Strategic Framework for Water Services (2003) set out the vision for the water services sector. It is this vision the goal of effective, efficient and sustainable provision of water services that benchmarking seeks to promote: Benchmarking also supports a key element of the National Water Services Regulation Strategy, namely to understand sector performance. The approach used in the benchmarking process is directly informed by the principles for understanding performance set out in the draft National Water Services Regulation Strategy. Key elements of this approach are summarised here: Sector vision: Water is life, sanitation is dignity All people living in South Africa have access to adequate, safe, appropriate and affordable water and sanitation services, use water wisely and practise safe sanitation. Water supply and sanitation services are provided by effective, efficient and sustainable institutions that are accountable and responsive to those whom they serve. Water services institutions reflect the cultural, gender and racial diversity in South Africa. Water is used effectively, efficiently and sustainably in order to reduce poverty, improve human health and promote economic development. Water and wastewater are managed in an environmentally responsible and sustainable manner. Strategic Framework for Water Services, 2003 A system that enables credible information to be published, based on actual performance by water services institutions, will create incentives to improve performance. The system is based on self-reporting by water services authorities themselves. The system focuses initially only on high-level outcome-related performance indicators. The implementation of reporting is incremental, recognising the limited capacity within many water services authorities. Financial ring-fencing of water services accounts is the first and most important step towards financial transparency. 1.2 The choice of indicators The draft National Water Services Regulation Strategy states the following: The Water Services Act sets out a comprehensive set of measures to be monitored in terms of water services authorities water services functions. These are amplified in the relevant technical regulations published under that Act. In addition to these, both National Treasury and DPLG have reporting requirements related to the performance of water services. In total these constitute a somewhat overwhelming set of reporting requirements and there is limited capacity in water services institutions to measure and report on these (and in national government to meaningfully monitor all of them). For this reason, the Strategic Framework elevated a limited set of key performance indicators for priority attention. Other elements of performance may be monitored, but priority and strategic attention will be given by the regulator to these nine key performance indicators. These priority indicators are listed in the text box below.

8 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 2 Performance indicators contained in the Strategic Framework: 1. Access to basic water supply 2. Access to basic sanitation supply 3. Quality of services: Potable water quality 4. Quality of services: Continuity of supply 5. Access to free basic services (water) 6. Access to free basic services (sanitation) 7. Financial performance: Affordability and debtor management 8. Asset management: Metering coverage and unaccounted-for water 9. Protection of the environment: Effluent discharge quality It was recognised at the time of drafting the Strategic Framework that these indicators would need to be further developed and elaborated while maintaining the essential principle of a limited set of high-level key performance indicators. The National Water Services Regulation Strategy used these indicators as a starting point and refined them into the following key performance measures. Note: these indicators have been updated subsequently updated. Performance measures to be monitored by water services authorities 1. Access to a basic water supply service 1.1 percentage access to at least a basic water supply 1.2 absolute backlog 1.3 rate of reduction in backlog 2. Access to a basic sanitation service 2.1 percentage access to at least a basic sanitation service 2.2 absolute backlog 2.3 rate of reduction in backlog 3. Drinking water quality 3.1 programme for water quality monitoring in place 3.2 water quality indicator (percentage samples passing SANS 241) 4. Impact on the environment 4.1 status of effluent treatment works 4.2 effluent quality monitoring system in place 4.3 percentage samples passing the minimum standard 4.4 assessments of treatment works 5. Strategic asset management and water demand management 5.1 meter coverage 5.2 metering efficiency (unaccounted for water) 5.3 asset management plan in place 5.4 audited water services asset register 6. Customer service standards 6.1 continuity of water supply: number of households experiencing an interruption of greater than 48 hours per incident 6.2 continuity of water supply: number of interruption of greater than 6 hours, 24 hours and 48 hours per incident per 1000 connections 7. Financial performance 7.1 water services financial audit 7.2 collection efficiency 7.3 average debtor days 7.4 financial self-reliance 7.5 average domestic tariff 8. Institutional effectiveness 8.1 number of employees per 1000 connections 8.2 WSA annual report submitted to the Minister Source: draft National Water Services Regulation Strategy (August 2005)

9 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 3 As a starting point, the National Benchmarking Initiative sought to measure performance based on these indicators (the regulatory key performance measures). The intention was to elaborate on these over time, in consultation with water services authority managers. See section 3 for discussion about the indicators used and their definitions. A group of nine municipalities forming part of the South African Cities Network and constituted as the City Water Managers Forum has undertaken a benchmarking initiative for the last three years. The additional indicators that this Forum has benchmarked are reported on in section An annual report on sector performance An annual report on sector performance will be published by DWAF. The details of this report are set out in the draft National Water Services Regulation Strategy (see text box below). Annual report on sector performance DWAF will publish an annual report on sector performance. This report will be based on: Reporting by water services authorities on the key regulatory performance indicators set out in this strategy. Financial reporting by water services authorities to National Treasury (on the basis of audited financial statements for water services, and common accounting conventions and reporting formats). Reporting by water boards on performance in terms of a standard framework (Annual report, with key performance indicators as required by DWAF). Reporting by water boards on financial performance (Audited financial statements). Regulatory interventions made by DWAF during the reporting period. Source: draft National Water Services Regulation Strategy 1.4 Creating positive incentives to report and to perform The draft National Water Services Regulation Strategy sets out a system for creating positive incentives to report and to perform, as follows: In view of the limited capacity within the sector to report on just a few high-level key performance indicators, achievement of sound and verifiable performance should be encouraged through a system of positive incentives. The key elements of a positive incentive system for reporting are as follows: First time reporting on each indicator in a reliable and verifiable way is recognised by giving a small (but not insignificant) reward to the water services authority. This reward may be used (only) for the purposes of visiting another water services authority to learn about best-practice management in an identified area. This learning is reported on and made available to the sector as a whole. Budgetary implications of such awards need to be noted and provided for in the annual budget of DWAF. Improved performance brings its own rewards. Nevertheless, in addition to these rewards, significant rewards will be made available to the following two water services authorities: the best performer in the country (based on a combined aggregated and weighted score of the key performance indicators); and the most improved performer in the country (the water services authority who demonstrates the most significant improvement between periods based on an aggregated and weighted score of the key performance indicators). The reward to each water services authority will be to send three people (one of whom must be the senior water services provider manager) on a study tour to a selected country to learn from best-practice water services management in that country and to communicate this learning to the rest of the sector on return.

10 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 4 It is the intention of the National Benchmarking Initiative to link with this system when it is set up. The annual Water Services Benchmarking Conference can be used for this purpose. 2 The benchmarking process 2.1 The annual benchmarking cycle It is intended that the National Benchmarking Initiative be managed in terms of an annual cycle as shown in Table 1. The cycle is based on the municipal financial year ending on 30 June and allows for a period of two months after the year end for water services authorities to complete their financial statements and to collate their performance data. Table 1: Timetable for the annual benchmarking process Month J F M A M J J A S O N D Activity (responsibility) 1. Final benchmarking report circulated to water services authorities (IA) 2. Indicators for next round finalised (NBI Steering committee) X X X 3. Consultation with participants (SALGA) X X X 4. Participation for next round agreed (SALGA) X 5. Revised indicator sheets circulated to water services authorities (PSP) X X 6. Water services authorities review, verify and correct data submitted for the previous round (water services authorities) X X X X X X 7. Municipal financial year end 30 June. X 8. Preparation (collation of financial and performance data) (water services authorities) X X 9. Visits to participating water services authorities (previous round) (PSP) X X X X X X X X 10. Planning for next round (PSP) X X 11. Visits with participating water services authorities (completion of indicator and performance sheets) (PSP) X X 12. Analysis and verification (PSP) X 13. Annual benchmarking conference (early December) (PSP) X 14. Preparation of benchmarking report (by 31 December) X Notes: IA = Implementing agent; PSP = benchmarking service provider. 2.2 Constraints experienced for the 2004/5 round It is important to note that the time-frames indicated above were considerably squeezed for the first round. The service provider was only appointed in mid-september 2005 and the participants only confirmed during the course of October. This left just two weeks for visiting

11 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 5 water services authorities and for the completion of the performance indicator sheets. The primary consequences of these shortened time-frames were as follows: Some of the identified municipalities were not able to participate. (Data for only 24 out of the 40 municipalities was provided. A further two municipalities did provide data but this was received too late to be included in the analysis.) Those who did participate were not able to supply the necessary data to compute all of the performance indicators. (Only 57% of the indicators were able to be calculated for the participating municipalities.) There was inadequate time to allow participating municipalities to verify the data supplied and the computed performance indicators. In addition to these important constraints, many of the participating municipalities also indicated that they did not have the necessary internal capacity to participate in the process adequately and to manage the information necessary to compute the benchmarks. 2.3 Participating municipalities SALGA has the primary responsibility to identify potential participants and to engage with them to obtain their willingness to participate in the benchmarking process. Forty municipalities were identified by SALGA and accepted by the National Benchmarking Initiative steering committee. The following 24 municipalities were able to participate in the 2004/5 round (see Constraints above): Metropolitan Municipalities District Municipalities Local Municipalities Johannesburg Central Msunduzi Tshwane Bophirima Mangaung Ekurhuleni Sekhukhune Buffalo City ethekwini Capricorn Potchefstroom Nelson Mandela Ukhahlamba Lephalale Cape Town Chris Hani Ngwathe Amatole Sisonke ilembe Ugu JS Moroka Rustenburg A further two municipalities did provide data but this was too late to be included in the analysis. Their data will be included in the following round. Because of the constraints set out in section 2.2, and the consequent lack of opportunity for municipalities to verify the information supplied, the individual performance of each municipality has not been revealed in this report. Instead, each participating municipality is identified in terms of a code as follows: M1, M2 (etc.) for metropolitan municipalities, DM1, DM2 (etc,) for district municipalities and LM1, LM2 (etc.) for local municipalities. The participating municipalities have been given their own codes so that they can compare their own performance with that of their peers.

12 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 6 In future, municipalities will have the opportunity to verify the benchmarks that have been supplied and computed. Consequently, the names of individual municipalities will be revealed when reporting performance. 2.4 Level of confidence in the performance indicators Each performance indicator (or grouping of like indicators) was coupled to one of the following level of confidence indicators: 1. Estimate or guess. 2. Information from a reliable system or source. 3. Information from an auditable source. 4. Audited information. Confidence level of data supplied 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Estimate Reliable Auditable Audited Not stated Figure 1: Level of confidence of data supplied Only two thirds of the indicators supplied had a level of confidence indicated. This is primarily due to the time constraints mentioned in section 2.2 as there is really no reason why this information should not be supplied for each indicator. Recommendation: In the next round of benchmarking, the service provider will be much more insistent and thorough in obtaining a level of confidence indication for each indicator supplied or computed. Most of the data supplied was considered to be an estimate or a guess. Only 1% of the indicators supplied were derived from audited data. The level of confidence in the data supplied should improve over time. There was some confusion regarding the distinction between levels 2 and 3. Recommendation: It is recommended that the level of confidence indicators be reduced from 4 to 3 by eliminating the current level 3 indicator (information from an auditable source). The new indicators for the level of confidence in the information supplied will be as follows:

13 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/ Estimate or guess. 2. Information from a reliable system or source. 3. Audited information. 3 Performance outcomes regulatory KPIs 3.1 Introduction This section sets out the performance of municipalities (water services authorities) in terms of the regulatory key performance indicators (KPIs), under the following headings: Definitions Sources of data (if relevant) Extent of reporting and confidence levels Performance outcomes Summary of performance outcomes Implications Recommendations Note to reader: The reader should refer to the indicator data sheet template for a more detailed description of each indicator and the supporting data required to calculate the indicator. In the figures, below, the terms returns and reliability are used. Returns refers to the percentage of the 24 participating municipalities that supplied data for the indicator. Reliability refers to the average reliability of all returns for which a level of confidence was given. An average of 1 would indicate that all returns are estimates or guesses. An average of 4 would indicate that all returns have been audited. For the sake of brevity, the word sample is used to refer to the participating 24 municipalities. 3.2 Institutional context For the purposes of context, some contextual data relating to the participating municipalities is given below. Population The reported population for each municipality is shown in Figure 2.

14 M5 M3 M4 M2 M1 M6 LM6 LM3 LM7 LM8 DM4 LM1 DM10 DM5 DM7 DM9 DM1 DM6 DM2 LM5 LM2 DM3 DM8 LM4 Number of connections M1 M5 M4 M3 M2 M6 DM8 DM4 LM8 DM5 LM6 DM7 DM10 DM1 LM7 DM2 DM9 LM1 DM6 DM3 LM2 LM5 LM3 LM4 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 8 Population 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, , % of total population in sample Figure 2: Reported populations The five largest metropolitan municipalities account for 59% of the population in the sample. Scale of operations Scale of operations (number of water connections) Figure 3: Scale of operations

15 M5 M3 M6 M4 LM7 M1 M2 DM2 LM3 LM5 LM8 LM6 LM1 DM5 DM6 DM9 DM10 DM3 DM7 LM4 DM4 DM1 LM2 DM8 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 9 The five largest metropolitan municipalities each have more than water connections and can be compared to major urban water utilities internationally. Each operation has a turnover in the order of a billion Rand or more. These are significant and complex businesses which need to be run on a professional basis. There is a second grouping of medium-scaled, largely urban operations (between one and water connections). Urban rural distribution 100% 90% 80% Percentage Urban Population Metros plus LM7 Secondary cities 70% 60% 50% 40% 30% 20% 10% 0% Figure 4: Percentage urban populations Half of the sample is predominantly urban (greater than 75%). The rest have larger rural populations than urban populations. 3.3 Access to basic water services Definitions Ref no Indicator Definition 1.1 Percentage access to water supply Proportion of people with access to at least a basic level of water supply as defined in the Strategic Framework. 1.2 Absolute backlog (water supply) Number of people without access to at least a basic water supply (as per the definition in the Strategic Framework). This includes those with no formal service and those served, but to below basic level. 1.3 Rate of reduction in backlog (water supply) The percentage reduction in the number of people without access to at least a basic water supply (as per the definition in the Strategic Framework).

16 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 10 Ref no Indicator Definition 2.1 Percentage access to a basic sanitation service The proportion of households with access to at least basic level of sanitation service. 2.2 Absolute backlog (sanitation) Number of households without access to at least a basic sanitation service (as per the definition in the Strategic Framework). This includes those served, but to below basic level, those with a bucket disposal service and those with no service. 2.3 Rate of reduction in backlog (sanitation) The percentage reduction in the number of households without access to at least a basic level of sanitation service (as per the definition in the Strategic Framework). Comments on the definitions 1. Consistency with national policy. These definitions follow those set out in the Strategic Framework for Water Services. 2. Unit of measure. Participating municipalities made a strong request to measure the backlog in terms of households rather than people. Participating municipalities also requested that the rate of reduction take into account the annual increase in the number of households in the supply area. 3. Definition of basic sanitation. Chemical toilets, bucket systems and unimproved pit latrines are not included in the definition of at least basic sanitation. Sources of data The draft National Water Services Regulation Strategy states that it is desirable that there be one national uniform reporting mechanism for information related to access to basic services and that the natural home for this is DPLG, because DPLG administers Municipal Infrastructure Grant (MIG) funds. Consequently, it is anticipated that, in future, information on access to water services will come from this system and not through the benchmarking process. However, until such a system is in place, municipalities will be asked to report on backlogs as part of the benchmarking process. Extent of reporting and confidence levels Obtaining reliable and up-to-date data on access to services is challenging for at least the following reasons: Reliable up-to-date population data is not available in most municipalities. Most municipalities do not have comprehensive and up-to-date asset registers, consumer databases and linked GIS systems. Households without access to services are typically not on the system (that is, they are not on the municipalities consumer database) nor on the map (living on a municipal-registered plot). Changes in settlements and services can be quite rapid. This means that the census data is typically out of date and municipal databases, where these exist, need to be continuously updated. Nevertheless, all 24 municipalities were able to report access figures. Not surprisingly, most of these were considered to be estimates or guesses.

17 LM3 LM7 M1 M5 LM5 M2 M4 M6 LM8 DM9 LM4 LM6 LM1 DM10 LM2 DM6 DM7 DM1 DM2 DM4 DM5 DM3 DM8 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 11 Performance outcomes access to a basic water supply 100% Access to at least a basic water supply (% population) Returns 100% Reliability 1.3 Good performance 80% Weighted Average = 86% 60% 40% 20% 0% Significant challenge Figure 5: Percentage population with access to at least a basic water supply service Access to at least a basic water supply service ranged from 23% to 100%, though it is implausible that two municipalities have no water service backlog at all. The weighted average (taking into account the populations in each municipality) was 86%. The absolute number of people without access to at least a basic water supply service is shown in Figure 6.

18 DM8 DM4 DM5 DM7 DM1 DM10 M4 DM2 LM6 DM6 DM3 M2 M6 LM8 M5 M1 LM2 DM9 LM4 LM5 LM1 LM7 LM3 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/ , , , ,000 Water backlog (number of people) Significant challenge Returns Reliability 100% 1.3 Total = 3.9 million Cost to wipe out backlog = approx. R3.4 billion Good performance 0 Figure 6: Water backlog (number of people) The total number of people in the sample without access to at least a basic water supply service is 3.9 million. The total cost of wiping out the backlog is approximately R3.4 billion (assuming R3 500 per connection and four people per connection). (It is not sensible to extrapolate these numbers to a national total.) The greatest challenges with respect to access lie in the district municipalities with large rural populations. Some metropolitan municipalities also have large numbers of people without access to at least a basic water supply service.

19 Population without basic water National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 13 Water backlog related to poverty 900, , , , , , , ,000 Good performance below line 100, , , , ,000 1,000,000 1,200,000 Population in households earning < R1600pm Figure 7: Relationship between backlog and income (for water) Note: The standard version of Excel does not have a facility to add labels to an XY graph so as to be able to indicate municipal codes for each data point. Readers can identify the relative position of their own municipality by referring to the values in the data sheet. It is possible to get an extension to Excel which has this feature. This feature will be incorporated in next year s report. As one would expect, the number of people without access to at least a basic water supply is less than the population living in households earning less than R1 600 per month in most municipalities. The rate of reduction in the backlog is shown in Figure 8.

20 DM5 DM7 M4 DM1 LM2 M6 DM10 LM1 M5 DM9 DM4 LM6 DM2 DM3 M2 LM3 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 14 Rate of reduction in backlog (% of backlog reduced per annum) Returns Reliability 67% % 30% 20% These will not meet access targets 10% 0% Figure 8: Rate of reduction in backlog to a basic supply In order to meet the national target to eliminate the backlog by 2008, municipalities need to be reducing their backlog by at least 25% per annum. Most municipalities are not making progress at this rate. Summary of performance outcomes access to a basic water supply Water backlogs in excess of 30% of the population: 11 out of 24 municipalities. Water backlogs exceeding people: 8 out of 24 municipalities. Municipalities unable to make the target date for elimination of water backlog at their present rate of progress: 12 out of 15 municipalities.

21 M5 M6 M3 M2 M4 M1 LM8 LM1 DM9 LM7 LM3 LM5 LM6 DM7 DM2 DM3 DM10 DM1 DM5 DM6 LM2 LM4 DM4 DM8 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 15 Performance outcomes access to basic sanitation 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Access to at least a basic sanitation service (% population) Good (relative) performance Average = 58% Returns 100% Reliability 1.3 Significant challenge Figure 9: Percentage population access to at least a basic sanitation facility Access to at least a basic sanitation service ranged from almost 0% to 90%. The weighted average (taking into account the populations in each municipality) was 58% (much lower than the 86% weighted average for access to water). The absolute number of people without access to at least a basic sanitation service is shown in Figure 10.

22 DM8 DM4 DM5 M1 M4 M3 DM10 DM1 M2 M5 DM7 DM6 DM2 LM6 LM8 LM2 DM3 LM7 M6 DM9 LM4 LM5 LM3 LM1 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 16 Sanitation backlog (People) Returns 100% Reliability 1.2 1,200,000 1,000, ,000 Significant challenge to complete service delivery within the targets 600, , ,000 0 Figure 10: Sanitation backlog (number of people) The total sanitation backlog is 7.9 million people (for the sample). The cost of eliminating this backlog is approximately R7 billion (assuming a cost of R3 500 per household and an average household size of 4). (It is not sensible to extrapolate these figures to the national level.) Fourteen municipalities have a sanitation backlog which exceeds people. This poses a significant challenge to the goal of meeting the national target of eliminating the backlog by 2011 (as set out in the Strategic Framework for Water Services).

23 DM6 DM7 DM8 DM10 LM4 LM5 LM8 M1 M3 LM7 M4 DM9 M5 LM1 M6 DM4 LM6 DM3 LM2 DM1 DM2 M2 LM3 DM5 Population without basic sanitation service National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 17 1,200,000 Sanitation backlog related to poverty 1,000, , , ,000 Good Performance 200, , , , ,000 1,000,000 1,200,000 Population in households earning < R1600 Figure 11: Relationship between backlog and income (for sanitation) In only five municipalities is the number of people without access to at least a basic sanitation facility less than the population living in households earning less R1 600 per month. Rate of reduction of backlog (Sanitation) Returns Reliability 63% % 20.0% Need to accelerate service delivery to meet targets 15.0% 10.0% Major challenge 5.0% No data provided 0.0% -5.0% Figure 12: Rate of reduction in sanitation backlog Most municipalities will need to accelerate the rate of delivery of sanitation services significantly if the national target is to be met.

24 Sanitation backlog (people) National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 18 Water versus sanitation backlog 1,200,000 1,000,000 Sanitation backlog exceeds water backlog 800, , , , , , , ,000 1,000,000 Water backlog (people) Figure 13: Sanitation backlog compared to water backlog As expected, the sanitation backlog exceeds the water backlog in all municipalities. Summary of performance outcomes access to basic sanitation Municipalities that have a sanitation backlog of greater than 30% of the population: 11 out of 24 municipalities (same as water). Municipalities that have sanitation backlogs exceeding people: 14 out of 24 municipalities (water was 8 out 24). Implications Municipalities that will not make the target date for elimination of sanitation backlog at their present rate of progress: 13 out of 15 municipalities. The magnitude of sanitation backlog greatly exceeds the water backlog (7.9 million people compared to 3.9 million). 1. Most of the data on access to services was considered to be an estimate or guess. More effort is needed to develop a uniform and reliable reporting mechanism, linked to the MIG funds. 2. The current rate of reduction of backlog is insufficient to meet the national targets for elimination of the backlog. This means that the current way of doing things will not result in the targets being met. 3. More can be learned from some existing examples of good performance in order to emulate this performance in other municipalities. Recommendation: National and local government will need to find a new way of doing things if the national targets for the elimination of the water and sanitation backlogs are to be met. Significant and dedicated resources will need to be devoted as a matter of urgency to understand the bottlenecks in delivery and to find ways of overcoming these.

25 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/ Drinking water quality Definitions Ref no Indicator Definition 3.1 Programme for water quality monitoring is in place The water services authority has instituted a programme of drinking water quality sampling in accordance with the Drinking Water Quality Framework (DWQF) and SANS 241 requirements. The following elements are satisfied: (1) testing requirements and standards are clearly defined for each source and supply area; (2) sampling is taking place as required; (3) tests are done through an accredited laboratory (accredited for the test regime); (4) results are recorded and stored; and (5) results are reported. 3.2 Water quality indicators The percentage of samples (per annum) taken in monitoring drinking water quality that meet or exceeded the allowable quality parameters. A failure for one parameter represents a failure of the sample. Comments on the definitions 1. Consistency with the National Drinking Water Quality Framework. The objective is to use definitions which are consistent with the draft National Water Services Regulation Strategy and with the National Drinking Water Quality Framework. However, in view of the fact that the South African National Standard (SANS) drinking water quality standards are in the process of revision, there is some uncertainty about which standards should apply. 2. Specification of drinking water quality monitoring programme. This is reasonably well specified. However, a Yes/No answer is not really adequate because it is often the case that the programme is in place for urban areas but not for rural areas. In this case, either a Yes or a No answer would be misleading. The definition is also misunderstood to apply to water exiting a water treatment works whereas the programme is required to monitor the quality of water at the point of end-use (that is, at the consumer s tap). 3. Specification of water quality indicator. This is not adequately specified in the draft National Water Services Regulation Strategy. Although the specification was elaborated in the Indicator Sheets, there is still a degree of uncertainty and some duplication in the definitions. The uncertainty relates to the specific standards to apply for each parameter (see point 1 above). The duplication relates to the use of two indicators for E.Coli (a pass/fail indicator as well as a percentage sample failure indicator). Sources of data Every water services authority is required to have a drinking water quality monitoring and reporting programme in place. If this is the case, then the high-level performance outcomes for drinking water requested in this benchmarking process should be readily available. However, the outcomes of the exercise (see below) suggest that this is not the case (that is, in many instances an adequate and effective drinking water quality monitoring program is not in place).

26 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 20 Extent of reporting and confidence levels The extent of reporting on drinking water quality (and the level of confidence expressed in the data supplied) was particularly poor (see details for each indicator below). Performance outcomes drinking water quality programme in place Returns 79% 18 Drinking Water Quality Monitoring programme in place Reliability Yes No No data Metro District Local Totals Figure 14: Drinking water quality monitoring programme in place Only 16 out of the 24 municipalities (two thirds) reported that they had a drinking water quality monitoring programme in place that met the minimum requirements. This is a disturbing statistic. One of the most important tasks of a water services manager is to ensure that the quality of drinking water supplied to consumers is safe and meets the minimum required standards. A failure to monitor this is serious, as lives could be at risk.

27 LM7 DM1 DM3 DM5 DM7 DM8 DM9 DM10 LM1 LM2 LM4 LM5 LM8 M2 M3 M5 LM3 DM4 LM6 M4 M1 DM6 DM2 M6 % Failure National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 21 Returns 25% 10% Drinking Water Quality % sample failures Reliability 1.6 9% 8% E.Coli Turbidity 7% 6% 5% 4% 3% 2% No data provided 1% 0% Figure 15: Percentage samples failing the relevant standard Only 7 out of the 24 municipalities provided data on drinking water quality (percentage sample failures for E.Coli and Turbidity). This could be partly the result of the tight time constraints imposed on this round of benchmarking. Even so, this is a disturbing statistic. Summary of performance outcomes drinking water quality programme in place Only 16 out of 24 municipalities reported having a drinking water quality monitoring programme in place. Even in the 16, it is possible that the programmes do not comply fully with the required standards (for example, in rural areas). Basic compliance data could not be provided by 17 out of 24 municipalities. This may be partly due to time constraints in this round. Nevertheless, this is probably the most significant risk issue facing the water industry. Implications Water services authority monitoring and reporting on drinking water quality is wholly inadequate. Much greater attention (than is currently the case) must be given to the issue of drinking water quality monitoring and reporting. This is a key priority area for attention. Recommendation: DWAF must accelerate its roll-out of the National Drinking Water Quality Programme with the aim of getting adequate monitoring and reporting programmes in place in all municipalities as soon as is practically possible.

28 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/ Impact on the environment Definitions Ref no Indicator Definition 4.1 Status of treatment works Current status of treatment works including status of discharge and other licences. 4.2 Effluent quality monitoring system is in place 4.3 Percentage of samples passing the minimum standard The water services authority is implementing an effluent discharge quality monitoring programme in accordance with nationally defined minimum standards. This has the following elements: (1) effluent discharge standards are clearly specified for each discharge point, (2) samples are taken as per the relevant standard, (3) samples are tested in an accredited laboratory (accredited for the test regime), (4) sample results are recorded and stored, and (5) results are reported. The percentage of samples taken in monitoring effluent quality that meet or exceed the minimum requirements (flow-weighted by discharge point). 4.4 Assessment of treatment works Proportion of treatment works that comply with the required output and treatment procedure requirements. The draft National Water Services Regulation Strategy notes that wastewater treatment effluent quality is monitored and reported on by water services authorities. Compliance with discharge licences is monitored by DWAF. Comments on the definitions 1. Status of treatment works. This is a straightforward definition and was well understood by the participating water services authorities. A wastewater treatment works is either operating in terms of a current licence or not, and a licence may have been applied for (or not). 2. Specification of the effluent quality monitoring. This is quite clearly specified and few problems were experienced in understanding the requirements. 3. Percentage samples passing the minimum standard. This required further elaboration, as different treatment works operate in terms of different licence conditions and standards. Water services authorities were required to calculate flowweighted average compliance across all major standards (suspended solids, COD, Ammonia, Nitrate, Phosphorous and E.Coli.) and all treatment works. 4. Assessment of treatment works. This definition was not well understood and reported on. The intention is to know what proportion of treatment works within a water services authority complies consistently with its licence conditions. What was not well specified was what constituted compliance. For example, does a 97% compliance with a defined standard constitute compliance with the licence conditions? (This required clarification from DWAF.) Sources of data Every water services authority is required to have an effluent (waste discharge) quality monitoring and reporting programme in place. If this is the case, then the high-level

29 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 23 performance outcomes for effluent (waste discharge) requested in this benchmarking process should be readily available. However, the outcomes of the exercise (see below) suggest that this is not the case (that is, in many instances an adequate and effective effluent quality monitoring program is not in place). Alternatively, many water services authorities may not have been able to translate detailed data into a high-level summary. Extent of reporting and confidence levels The extent of reporting on effluent quality (and the level of confidence expressed in the data supplied) was poor (see details for each indicator below). Performance outcomes Returns 58% 90 Wastewater treatment Status of licences No licenses Number WWTW Number licensed Metro District Local Totals Figure 16: Status of wastewater treatment works Only 58% of municipalities reported on the status of their wastewater treatment works. Eighty-five wastewater treatment works were identified, of which 24 had no current licence.

30 DM2 DM3 DM4 DM5 DM6 DM7 DM8 DM10 LM1 LM7 LM8 M3 M5 DM1 LM2 LM5 M1 M4 M2 DM9 LM6 LM4 M6 LM3 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/ Yes No No data Effluent Quality Monitoring programme in place Returns Reliability 63% Metro District Local Totals Figure 17: Status of effluent quality monitoring programme Only 63% of municipalities reported on whether they had an effluent monitoring programme in place. Only one of the 15 municipalities that did report did not have a programme in place. Effluent quality- Samples passing Returns Reliability 46% % 90% 80% 70% Results a concern 60% 50% 40% Result a serious concern 30% 20% 10% No data available 0% Figure 18: Effluent quality - percentage samples passing the required standard

31 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 25 Only 5 of the 11 municipalities that provided sample pass/failure data had effluent results that approached compliance (in the 95% or above range). Several reported high failure rates. Summary of performance outcomes environment Number of wastewater treatment works not licensed is 24 out of 85 (28%). Only 14 out of 24 have a monitoring system in place (58%). Only 11 of the 24 were able to report on compliance (46%). Implications Only 5 of the 11, above, reported compliance that was above (or close to) the minimum standards. The results suggest some cause for concern regarding the impact that municipalities are having on the environment and the quality of wastewater discharged. 3.6 Strategic asset management and water-use efficiency Definitions Ref no Indicator Definition 5.1 Meter coverage The percentage metered end-use connections in relation to the total number of end-use connections. 5.2 Metering efficiency ( unaccounted for water ) Volume of water which is supplied to end-users and metered, expressed as a percentage of the total input volume into the reticulation network. 5.3 Asset management plan in place An asset management plan for water and sanitation infrastructure and operations in place and approved by Council. 5.4 Audited water services asset register Water services asset register to the required standards in place and receiving an unqualified audit report. Comments on the definitions 1. Meter coverage. In terms of the regulations relating to the Water Services Act, all unrestricted-volume water connections must be metered. This definition was elaborated in the data sheet to take into account whether or not connections were volume restricted. Examples of volume-restricted connections include low pressure tanks and connections with restrictors on them. There is a grey area related to communal standpipes, however. Although ideally all communal standpipes should be metered, this is not always practical or cost-effective. In this case metering a defined group of standpipes to monitor consumption may be sufficient. The definition of meter coverage needs to take this into account. 2. Metering efficiency. This definition is open to interpretation and more effort needs to be exerted to ensure a standard interpretation. Issues arise where groups of standpipes or low pressure tank supplies, for example, are metered as a group and not individually. Strictly speaking, only volumes metered at the point of end-use should be included in the calculation of the volume of water supplied and metered. 3. Asset management plan in place. An asset management plan is a plan which sets out how water services assets will be managed over time. Key elements of an asset management plan are as follows: asset maintenance, asset replacement, life-cycle costings, and optimisation of maintenance and replacement. A water services

32 DM2 DM4 DM5 DM6 DM7 DM8 DM10 LM1 LM4 LM5 M4 M2 M5 M6 LM3 DM9 LM8 LM7 M1 LM6 DM1 DM3 M3 LM2 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 26 development plan which includes these elements adequately can be considered to be an asset management plan. It is recognised that having an asset management plan is insufficient on its own and, further, that a municipality might not have a plan but nevertheless manage its assets better than a municipality that does have a plan. 4. Audited asset register in place. This was separated into two sub-parts in the indicator sheet: an up-to-date asset register in place, and an asset register that has been audited (with audit date supplied). Appropriateness of grouping of indicators Some questions were raised at the annual benchmarking conference as to the appropriate grouping of these indicators. There are many ways to group indicators and no one method is better than any other. Metering efficiency could also be considered to be an operational indicator, for example. In view of the fact that there is not a set of operational indicators (as the regulatory indicators are high-level outcome indicators), and due to the fact that it is not possible to manage water services assets well unless water supplied is metered, metering efficiency was included in an asset management set. Data sources The information for these indicators should come from a municipality s management information systems. Performance outcomes Meter coverage (% of connections) Returns Reliability 54% % 80% Significant challenge 60% 40% 20% No data provided 0% Figure 19: Meter coverage Many municipalities were not able to provide data on meter coverage. Of those that did, many face a significant challenge to meter all end-use connections which are not volume restricted.

33 DM2 DM4 DM5 DM6 DM7 DM8 DM10 LM1 LM4 LM5 LM6 M2 M4 DM9 M5 M6 LM7 LM8 M1 DM1 M3 LM2 DM3 LM3 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 27 It is important to note that there was probably some inconsistency in the reporting of this indicator. This needs to be improved in the following round. 100% 90% 80% 70% Metering efficiency Returns Reliability (Volume metered / volume supplied through unrestricted connections) benchmark 54% % 50% 40% 30% 20% 10% 0% No data available Serious challenge Figure 20: Metering efficiency Many municipalities were not able to provide data on metering efficiency. Of those that did provide data, many face a significant challenge to increase metering efficiency to the bestpractice benchmark of 85%. It is important to note that there was probably some inconsistency in the reporting of this indicator. This needs to be improved in the following round.

34 Number National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 28 Asset management plan in place Returns Reliability 67% Yes No No data Metro District Local Totals Figure 21: Asset management plan approved by Council Eight municipalities did not report on the existence on an asset management plan. This may be the result of some uncertainty about what exactly comprises an asset management plan and how this related to the water services development plan (see definitions above). Of the 16 that did report, just 5 indicated that they had an asset management plan that was approved by Council. The sound management of water services assets is an essential part of the business of managing water services. It is therefore of some concern that so few municipalities have asset management plans in place.

35 Number National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 29 Asset register in place Returns Reliability 67% Yes No No data Metro District Local Totals Figure 22: Up-to-date asset register in place The results are similar (not surprisingly) to those for the asset management plan, with six municipalities indicating that they had an up-to-date asset register. Having an accurate and up-to-date asset register is an indispensable part of managing a water services business effectively. Summary of performance outcomes asset management Municipalities not able to report on extent of metering of the water network: 11 out of 24 municipalities. Municipalities with meter coverage greater than 80%: only 5 out of 13. All fall below the accepted benchmark for metering efficiency. Asset management plan in place: only 5 out of 24 municipalities. Up-to-date asset register in place: only 6 out of 24 municipalities. Implications There is a need for a great deal of improvement in the way in which municipalities manage water service assets. The first priority is to ensure that all volume-unrestricted connections are metered. The second priority is to increase metering efficiency. (These two goals are related.) With improved knowledge of water use it is then possible to plan effectively for the appropriate maintenance, rehabilitation, replacement and expansion of assets through the development of an asset management plan and by making use of an up-to-date asset register.

36 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/ Customer service standards Definitions Ref no Indicator Definition 6.1 (see note below) Continuity of water supply number of households experiencing an interruption of greater than 48 hours. 6.2 Continuity of water supply number of interruptions of greater than 6 hours, 24 hours and 48 hours per incident per connections. Comments on the definitions Number of households that have experienced interruptions of greater than 48 hours or more for a single incident. The number of interruptions of greater than 6 hours, 24 hours and 48 hours per incident per connections. 1. The indicator for continuity of supply, number of households experiencing interruptions to water services, has been identified in the draft National Water Services Regulation Strategy as a critical aspirant indicator to be implemented at a later stage. Nevertheless, water services authorities were asked to provide data if they were able to do so. 2. The definition was elaborated as follows: number of interruptions to water and/or sanitation services of greater than 6, 24 and 48 hours for a single incident per service connections. Performance outcomes The reported data is not considered to be meaningful at this stage as too few were able to report and the base of seems inappropriate. Recommendation: This indicator be revisited during the next round. Implications The accurate measurement of customer service standards requires sophisticated management information and reporting systems. Most municipalities do not have these in place. For this reason, it is considered premature to focus on the measurement of these indicators at this stage. Nevertheless, the indicator will be kept on the agenda and reported on when meaningful data becomes available over time. 3.8 Financial performance Definitions Ref no Indicator Definition 7.1 Water services financial audit Separate audit of ring-fenced water services finances and the receipt of an unqualified audit report thereon. 7.2 Collection efficiency The comparison of the amount of revenue (cash) collected from water sales to the amount billed for water sales. 7.3 Debtor days (water) The total outstanding debt for water, less provisions for bad debt, divided by annual revenue from the sale of revenue, expressed in days.

37 DM4 DM6 DM7 DM8 DM9 DM10 LM1 LM7 M2 M5 M4 LM4 DM1 M1 M3 LM5 DM5 LM8 LM3 M6 DM3 LM6 DM2 LM2 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/ Financial self-reliance Ratio of income from water sales and user charges to total operating expenditure on water and sanitation services (including interest charges and depreciation). 7.5 Average domestic tariff A measure of average water services user charges, including fixed charges for a normal (non-indigent) domestic consumer at 10kl per month and 30kl per month. Comments on the definitions 1. The definition of what constitutes a ring-fenced set of water services accounts needs to be better specified. 2. The use of the term revenue in the collection efficiency definition is confusing. It should refer to cash collected (not revenue collected). Performance outcomes - finance Only 6 out of 24 municipalities reported having ring-fenced water services accounts. Only 3 out of 24 municipalities reported having a separate independent audit of their water services accounts. 100% Collection efficiency (% revenue vs total amount billed) Returns Reliability Sustainability threatened 46% % 60% 40% 20% No data provided 0% 10 out of 24 did not report on collection efficiency. Of the 14 that did, many reported levels which are alarmingly low and which pose a significant threat on the sustainability of the service.

38 DM2 DM4 DM5 DM6 DM7 DM8 DM9 DM10 LM1 LM2 M2 M3 M5 LM3 LM7 DM1 M6 M4 LM8 LM5 M1 DM3 LM6 LM4 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 32 Debtor days (after provisions for bad debt) Returns Reliability 46% Sustainability threatened 90 No data provided - Figure 23: Debtor days for water (or for water and sanitation where only this available) Only 11 out of 24 reported on debtor days. Debtor days after provisions for bad debt should be less than 90 days. Most of the municipalities that reported on debtor days had debtor days (after provisions for bad debt) well in excess of 90 days.

39 DM2 DM3 DM4 DM7 DM8 DM9 DM10 LM1 LM2 M2 M3 M4 DM5 DM6 LM3 LM4 LM7 LM5 LM6 M6 LM8 DM1 M1 M5 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 33 Dependency (% of income from grants) Returns Reliability 50% % 60% 50% 40% 30% High level of dependency 20% 10% No data provided 0% Figure 24: Extent of dependency on grants Some municipalities have a very high dependency on operating grants to cover their operating expenses.

40 DM2 DM3 DM4 DM6 DM7 DM8 DM9 DM10 LM1 LM2 DM1 LM8 M2 LM6 M1 LM7 M3 M4 M6 LM3 M5 LM5 LM4 DM5 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 34 Tariffs (R per kl) Returns Reliability 63% kl per month 30 kl per month No data provided M M M M M M Figure 25: Retail water tariffs for normal domestic consumers There is a wide range of tariffs for domestic consumers. This can be expected given the diversity of supply conditions across the country. Of more significance is the different ratio between the tariff for 10 kl per month compared to the tariff for 30 kl per month, particularly between the metropolitan areas. Also of significance will be the trends in tariffs over time. This will only become known as the benchmarking process progresses. These tariffs need to be understood in relation to the structure of the full cost of water supply and sanitation services and the related tariffs and charges as shown in Figure 26 (source: Strategic Framework for Water Services).

41 National Benchmarking Initiative: promoting best practice. Benchmarking outcomes for 2004/5 35 Figure 26: Water cost and pricing chain Most municipalities have control of only the retail water and sanitation tariffs. This typically makes up only 50% of the total cost of water supply. Some municipalities also control the bulk water and/or wastewater tariffs. Summary of performance outcomes finance Ten out of 24 municipalities were not able to report on collection efficiency. Only 3 out of 24 had a collection efficiency exceeding 90%. Implications The poor collection rates reported are a very significant threat to the sustainability of the sector. Six out of 11 had debtor days exceeding 90 days (after provisions for bad debt). Four out of 11 are highly dependent on external grants (more than 30% of income). There is a very significant range in tariffs (R2.50 to R7.50) which could arise from a range of institutional, physical and other factors. The level of financial performance reported should be of grave concern. Unless there are significant improvements in this performance, the sustainability of water services infrastructure will become more and more dependent on central government grants. This is not a healthy situation. International experience suggests that the long-term sustainability and good performance of water services is best served where water services providers are able to reduce their dependence on external grants over time and become more accountable to the local users of the service.